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January 2023 - Exploring the Healthcare Transparency in Coverage final rule
I arrived in fintech post Dodd-Frank and in the middle of the Durbin Amendment playing out. All in all, the Durbin amendment aimed to reduce transaction costs in commerce, and had lots of unintended consequences as I’ve written about here, including (in my opinion) enabling the development of the fintech ecosystem as it exists today, by taking a fee pool that had formerly been accessible only to incumbents, and enabling upstarts like Cash App, Chime and Venmo to participate in it, and in so doing, funding the next generation of fintech infra like Marqeta.
Watching this play out, and more generally observing some of the ways we’ve had to react to legislative or regulatory enforcement changes in fintech at Cash App and in healthcare at Carbon Health, it’s clear that legislative changes, and the regulatory implementations of those legislations, often create openings for new businesses to be built in their wake.
In healthcare, there are 2 regulatory changes that are playing out right now, that I’m deeply interested in. The first is the Individual Coverage Health Reimbursement Arrangement (ICHRA). Among other things, ICHRA eliminates the tax advantaged status of employer funded insurance, by enabling employees to buy health plans on an exchange, using pre-tax dollars. I think this has the potential to accelerate the decoupling of employment and insurance in the US, increasing privacy and employee mobility in the US, and unwind almost 100 years of healthcare system design kicked off by WW2.
The second regulatory change (and the point of this essay) is the Transparency in Coverage final rule. This went into effect on July 1, 2022, and it forces insurers to publish the contract rates they have negotiated with every healthcare provider in network in that plan, for every service covered by that plan, the out of network rates of that plan, the specific clinicians (by NPI) covered in the plan, in a standard machine readable format (seems they learned their lesson from the hospital price transparency rule where hospitals simply published a bunch of garbage thereby continuing to obfuscate pricing). It does a lot of other things too.